
How to Put My House in a Trust
Learn how to put your house in a trust in the UK and understand the legal, tax and planning implications
How to Put My House in a Trust
Placing your home in a trust is a significant legal decision that can offer peace of mind and long term security for your loved ones. It is often used as part of estate planning to ensure assets are passed on according to your wishes, potentially reduce inheritance tax or provide protection in case of future care needs. However, the process involves careful planning and legal guidance, and it is important to understand both the benefits and the responsibilities before going ahead. If you are considering putting your house in a trust, this guide will explain how it works, what the implications are and how to do it correctly.
What It Means to Put Your House in a Trust
When you place your house in a trust, you transfer legal ownership of the property to trustees, who manage it on behalf of beneficiaries. You decide the rules of the trust and what happens to the property during your lifetime and after your death. While you may no longer be the legal owner, you can still retain rights to live in the property depending on the type of trust you create.
There are several types of trusts, each with its own rules and tax implications. The most common include bare trusts, interest in possession trusts and discretionary trusts. The type you choose depends on your objectives. Some people use trusts to pass the family home to children while continuing to live there, while others use them to provide for vulnerable beneficiaries or to structure their estate in a tax efficient way.
Reasons for Using a Trust
Many people choose to place their home in a trust as part of their inheritance planning. By doing so, they can help ensure that the property is passed on according to their wishes without going through probate. It can also offer some protection against challenges to the will and avoid delays in administering the estate.
In some cases, putting a house in a trust can help with inheritance tax planning, though the rules are complex and depend on the value of the estate, the type of trust and how long ago the transfer was made. Some people also use trusts to try to reduce care home fee liability, though this area is closely scrutinised by local authorities and can be challenged if it is deemed that the transfer was made deliberately to avoid paying for care.
How to Set Up a Property Trust
The first step in placing your home in a trust is to decide what you want the trust to achieve and who the beneficiaries will be. You will then need to choose the most suitable type of trust based on those goals. This is a legal process and requires a formal trust deed, so it is essential to seek advice from a qualified solicitor with experience in trusts and estate planning.
The solicitor will draft the trust deed, which sets out the terms of the trust, names the trustees and outlines how the property should be managed. Once the trust is created, the property title must be legally transferred to the trustees. This involves completing the appropriate forms and registering the change of ownership with HM Land Registry. In some cases, stamp duty may be payable, depending on the circumstances.
You will also need to consider how the trust will be administered. Trustees have a duty to manage the trust property in the best interests of the beneficiaries and must keep proper records. In some cases, the trust will need to be registered with HMRC and annual tax returns submitted.
Legal and Financial Implications
Putting your house in a trust is a major financial and legal decision. It may affect your eligibility for certain benefits, your tax position and your control over the property. While some trusts allow you to continue living in your home, others may restrict your ability to sell or borrow against it. You should also be aware that trusts are subject to their own tax regime. This includes possible inheritance tax charges, income tax and capital gains tax depending on how the trust is structured and what income it generates.
If your main reason for creating a trust is to reduce exposure to care home fees, you should seek expert advice. Local authorities are entitled to assess whether a transfer of assets was made deliberately to avoid care costs, and if they find evidence of deprivation of assets, they can take the trust property into account during a financial assessment.
Is It Right for Everyone
Trusts can be powerful tools in estate planning, but they are not suitable for everyone. The benefits depend heavily on your personal circumstances, financial situation and long term goals. For some, a trust offers the right combination of control and protection. For others, a simple will or joint ownership arrangement may be more appropriate.
It is essential to weigh the benefits against the cost and complexity of setting up and managing a trust. You must also ensure that your trustees are trustworthy, capable and fully aware of their responsibilities. Speaking with a solicitor or financial adviser who specialises in estate planning will help you make an informed decision that reflects your wishes and protects your interests.
Final Thoughts
Placing your house in a trust can offer security, clarity and peace of mind when handled correctly. Whether your aim is to pass on your home to your children, provide for loved ones after your death or manage your estate more efficiently, a trust may be the right solution. However, it is not a decision to be taken lightly. With professional advice and a clear understanding of the legal and financial implications, you can create a trust that safeguards your property and supports the people who matter most to you.